Clearly Constitutional

A Primer on the Constitutionality of the Affordable Care Act

Ian Millhiser  January 18, 2011

Introduction

Nearly three dozen judges have now considered challenges to the landmark
Affordable Care Act and the overwhelming majority of these cases have been
dismissed. Nevertheless, a single outlier judge in Virginia has embraced the merit-
less arguments against the new health care law and another judge in Florida also
appears poised to break with the overwhelming consensus of his colleagues.

With only a few exceptions, these lawsuits principally challenge the Affordable
Care Act’s minimum coverage provision—the provision requiring most Americans
to either carry health insurance or pay slightly more income taxes—falsely arguing
that Congress lacks the constitutional authority to enact such a provision. It is true
that Congress’s authority is limited to an itemized list of powers contained in the
text of the Constitution itself, but while Congress’s powers are not unlimited, they
are still quite sweeping. There is no doubt that the Affordable Care Act fits within
these enumerated powers in three ways, as this issue brief will demonstrate.

Congress has broad power to regulate the national economy

A provision of the Constitution known as the “commerce clause” gives Congress

power to “regulate commerce … among the several states.” And there is a long
line of Supreme Court decisions holding that Congress has broad power to enact
laws that substantially affect prices, marketplaces, or other economic transactions.
Because health care comprises approximately 17 percent of the national economy,
it is impossible to argue that a bill regulating the national health care market does
not fit within Congress’s power to regulate commerce.

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Nevertheless, opponents of the Affordable Care Act claim that a person who does
not buy health insurance is not engaged in any economic “activity” and therefore
cannot be compelled to perform an undesired act. Even if these opponents were
correct that the uninsured are not active participants in the health care mar-
ket—and they are active, of course, every time they become ill and seek medical
care—nothing in the Constitution supports this novel theory. Indeed, this theory
appears to have been invented solely for the purpose of this litigation. Congress
has enacted countless laws which would be forbidden under this extra-constitu-
tional theory:

• Guns: President George Washington signed a law that required much of the
country to purchase a firearm, ammunition, and other equipment in case they
needed to be called up for militia service. Many of the members of Congress
who voted for this mandate were members of the Philadelphia Convention that
wrote the Constitution.

• Civil rights: The Civil Rights Act of 1964 compelled business owners to engage
in transactions they considered undesirable—hiring and otherwise doing busi-
ness with African Americans.

• Insurance mandates: The Affordable Care Act is not even the only federal law
requiring someone to carry insurance. The Price-Anderson Act of 1957 requires
nuclear power plants to purchase liability insurance and the Flood Disaster
Protection Act requires many homeowners to carry flood insurance.

• Other mandates: Other laws require individuals to perform jury service, file tax
returns, and register for selective service.

The minimum coverage provision is the keystone that holds the

Affordable Care Act together

The Constitution also gives Congress the power “[t]o make all laws which shall be
necessary and proper for carrying into execution” its power to regulate interstate
commerce. As Supreme Court Justice Antonin Scalia explains, this means that
“where Congress has the authority to enact a regulation of interstate commerce, it
possesses every power needed to make that regulation effective.”

The act eliminates one of the insurance industry’s most abusive practices—deny-

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ing coverage to patients with pre-existing conditions. This ban cannot function if
patients are free to enter and exit the insurance market at will. If patients can wait
until they get sick to buy insurance, they will drain all the money out of an insur-
ance plan that they have not previously paid into, leaving nothing left for the rest
of the plan’s consumers.

Seven states enacted a pre-existing conditions law without also passing an insur-
ance coverage requirement, and all seven states saw health insurance premiums
spiral out of control. In some of these states, the individual insurance market col-
lapsed. There is a way out of this trap, however. Massachusetts enacted a minimum
coverage provision in 2006 to go along with its pre-existing conditions provision
and the results were both striking and immediate. Massachusetts’ premiums rap-
idly dropped by 40 percent.

In other words, because the only way to make the pre-existing conditions law
effective is to also require individuals to carry insurance, that requirement easily
passes Scalia’s test.

The link between the minimum coverage provision and the Affordable Care Act’s
insurance regulations also sets this law aside from other hypothetical laws requir-
ing individuals to purchase other goods or services. The national market for veg-
etables will not collapse if Congress does not require people to purchase broccoli,
nor will Americans cease to be able to obtain automobiles absent a law requiring
the purchase of cars from General Motors. Accordingly, a court decision uphold-
ing the Affordable Care Act would not provide a precedent enabling Congress to
compel all Americans to purchase broccoli or cars, despite the law’s opponents’
claims to the contrary.

Congress has broad leeway in how it raises money

Congress also has the authority to “lay and collect taxes” under the Constitution.
This power to tax also supports the minimum coverage provision, which works
by requiring individuals who do not carry health insurance to pay slightly more
income taxes. Taxpayers who refuse insurance must pay more in taxes while those
who do carry insurance are exempt from this new tax. For this reason, the law is
no different than dozens of longstanding tax exemptions, including the mortgage
interest tax deduction, which allows people who take out home mortgages to pay
lower taxes than people who do not.

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Opponents of the Affordable Care Act respond that the minimum coverage
provision somehow ceases to be a tax because the new law does not use the word
“tax” to describe it, but this distinction is utterly meaningless. Nothing in the
Constitution requires Congress to use certain magic words to invoke its enumer-
ated powers. And no precedent exists suggesting that a fully valid law somehow
ceases to be constitutional because Congress gave it the wrong name.

Ian Millhiser is a Policy Analyst and Blogger for the Center for American Progress
where his work focuses on the Constitution and the judiciary.

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